We have all heard about the new bill passed by the Trump administration, both good and bad. But how does it affect us in Texas and the real world? Below are 3 tax changes in the Big Beautiful Bill you need to know.

What is the Big Beautiful Bill?

Also known as Public Law 119-21, The One, Big, Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. The bill is important because it has changes on federal taxes, deductions, and credits that affects just about everyone. It also implements cuts and expenses into the budget on a long term basis.

Did you know? The OBBBA almost did not pass. It was up to Vice President J.D. Vance to make the final vote in favor of the bill?

1. The Trump Tax Cuts are Extended

Back in Trump’s first term, a tax cut was passed across the board. This was called the Tax Cuts and Jobs Act of 2017. In short, these were the bracket changes:

  1. The 15% income tax bracket was reduced to 12%.
  2. The 25% income tax bracket decreased to 22%.
  3. 28% income tax bracket was reduced to 24%.
  4. The 39.6% income tax bracket was reduced to 37%.

However, these were set to expire in 2025. The OBBBA extends them indefinitely. Those of you who have your income tax automatically deducted from your paycheck should ensure the correct amount is being withheld.

2. No Tax on Tips or Overtime

For the next three years, you may deduct qualified tips of up to $25,000 as long as you don’t exceed your net income. Qualified tips include those earned as a server, beautician, driver, and many other occupations. In many cases, tax filers will be required to fill out IRS Form 4137 as part of their tax return.

The same goes for $12,500 yearly pay for overtime pay in many cases. Even if you are taxed in the bottom 12% of income earners, this means an extra $1,500 per year in take home pay. Be sure to tell your bookkeeper of all tip and overtime income you earn to make sure you file correctly.

Did you know that over 3 million American workers receive tips on a regular basis? Source: Lift HCM

3. Extra Deductions

A few extra deductions are also available under this bill. The most notable is the standard deduction for individuals goes up to $15,750, and up to $31,500 for married couples. Head of households can deduct up to $23,625 on their yearly taxes. This deduction is permanent and will be adjusted yearly for inflation. Tax filers who are 65 and older also may deduct an extra $6,000 each year. There are also additional deductions for child care, property taxes, car loans, savings for children, and much more.

More Changes in the Big Beautiful Bill for those in Houston

Are you located in Houston and want to learn more how this law affects your business and/or personal tax returns? You may contact us to learn more about how you can get the most out of this bill.